Rad and Jr, if you think it sucks, what are your ideas? It would make your comments more helpful.

I thought I knew a lot about this - Microsoft bought my last company - but I still learned a ton from these slides. This deck is about the art of the deal, and it does a great job of breaking it down into all the subtle details. The key take away is that closing a successful sale is an intricate dance through a minefield. It needs to be thoroughly choreographed in advance to be successful. The tiniest things can send a deal sideways, and perception is reality. These slides provide a compass and a map.

This presentation is absurdly simplistic, detached from business reality, disorganized, overly long, and lacks educational value. Other that that, its great! HOW DOES TRIVIA LIKE THIS GET FEATURED ON SLIDE SHARE, ANYWAY? (Monkeys in control, I suspect/0

Decide to sell: 1. Things
are not going according to plan 2. You’ve run out of alternate plans 3. Both 1. and 2. are well-kept secrets 4. You have time01: Decide 11

When to start the selling
process 1. Things are not going according to plan i.Lack of product-market ﬁt ii.Team conﬂict iii.No longer believe in vision iv.No fundraising traction v. External threat that is probably lethal 2. You’ve run out of alternate plans 3. Both 1. and 2. are well-kept secrets 4. You have time01: Decide 12

When to start the selling
process 1. Things are not going according to plan i.Lack of product-market ﬁt ii.Team conﬂict iii.No longer believe in vision iv.No fundraising traction v. External threat that is probably lethal 2. You’ve run out of alternate plans vi. No more restarts vii. No more pivots 3. Both 1. and 2. are well-kept secrets 4. You have time01: Decide 13

When to start the selling
process 1. Things are not going according to plan i.Lack of product-market ﬁt ii.Team conﬂict iii.No longer believe in vision iv.No fundraising traction v.External threat that is probably lethal 2. You’ve run out of alternate plans vi. No more restarts vii. No more pivots 3. Both 1. and 2. are well-kept secrets viii. Outside world thinks your startup is doing *at least* well, preferably “crushing it” 4. You have time01: Decide 14

When to start the selling
process 1. Things are not going according to plan i.Lack of product-market ﬁt ii.Team conﬂict iii.No longer believe in vision iv.No fundraising traction v. External threat that is probably lethal 2. You’ve run out of alternate plans vi. No more restarts vii. No more pivots 3. Both 1. and 2. are well-kept secrets viii. Outside world thinks your startup is doing *at least* well, preferably “crushing it” 4. You have time ix. At least 6 months of ﬁnancial and team runway01: Decide 15

The Plan Conventional narrative is
that companies aren’t sold, they are bought. The notion of not having a plan for what could be the most transformative event in your team’s life is simply insane02: Plan 16

3. Adjust Roadmap I. Remove
impediments to exit •Extract company from any business development deals that will be viewed as liabilities •Kill crazy bet-the-company skunkworks project that will take 2 years to build •Settle any pending legal action •Align incentives so nobody internally will be motivated to kill a deal II. Increase strategic value of company III. Optimize optics02: Plan 25

3. Adjust Roadmap I. Remove
impediments to exit •Extract company from any business development deals that will be viewed as liabilities •Kill crazy bet-the-company skunkworks project that will take 2 years to build •Settle any pending legal action •Align incentives so nobody internally will be motivated to kill a deal II. Increase strategic value of company •General frame = Low dev complexity, high strategic upside to prospective acquirers •Adjust product roadmap to help enable exit •Close low-hanging-fruit deals •Titles III. Optimize optics02: Plan 26

3. Adjust Roadmap I. Remove
impediments to exit •Extract company from any business development deals that will be viewed as liabilities •Kill crazy bet-the-company skunkworks project that will take 2 years to build •Settle any pending legal action •Align incentives so nobody internally will be motivated to kill a deal II. Increase strategic value of company •General frame = Low dev complexity, high strategic upside to prospective acquirers •Adjust product roadmap to help enable exit •Close low-hanging-fruit deals •Titles III. Optimize optics •Perception IS reality •Steady drumbeat of PR - If you didn’t care about it before, now is time to start caring •Manufacture compelling narrative & scream it as loud as possible02: Plan 27

1. Initiating Discussions I. Code
•Roleplay from potential acquirer’s vantage point pre-meeting •Partnership vs. acquisition •Pick up and adapt to their verbal and non-verbal queues •You want them to be the ﬁrst to say the word “acquisition”, not you II. Third parties •Customers, investors, or contacts make the introduction •CEO must be the negotiator/decider in acquirer’s eyes •Close behind the scenes advisor who has been through it before is great III. Implicit selling •Eﬀective sales doesn’t feel like selling •It’s dating, not sex V. Optics •Meeting locations •Personal aesthetics •LinkedIn proﬁles, GitHub, personal and company blogs must all be on message03: Execute 38

3. Price: Is not as
it seems •Cash vs. Stock •early stage private company stock should typically be valued at zero •Earn outs •Indentured servitude •Contingencies •Assign informed probabilities to every contingency •Avoid revenue or results based milestones •Holdbacks •Up to 20%, 2 years is typical03: Execute 43

3. Price: Multiple interested parties
Only way to optimize price is to have options •You must parallel path acquisition discussions with multiple parties •DO lean forward on communicating level of interest from other interest parties •DO NOT name the other interested parties •DO NOT fabricate other interested parties03: Execute 44

4. Negotiations: People at acquirers
have warped incentives. Leverage them •Understanding the psychology is critical •Almost all decisions at a big company are motivated by internal politics •Managers want to look good to their boss •New CEO wants to shake things up in role and make a mark •Privately held companies may want your investors on their cap table •Managers want to build their personal networks •Probable that their actual motivations for acquiring you are hidden... and warped.03: Execute 47

4. Negotiations: Avoid agency problems
•Bankers •Bankers are ultimately incentivized to build their long term deal pipeline, understand what this means for you •Only acceptable use case is (I) multiple term sheets, and (2) strategic or technology acquisition •Lawyers •Some law ﬁrms are notorious for dragging deals out to maximize billable hours •Have your lawyers call out their lawyers at the ﬁrst sign this is happening •Time is the enemy •Internal agency problems •There are stakeholders within acquirer who could be against a deal happening •Watch out for board members •Figure out who they are, and preemptively turn them into deal champions03: Execute 50

1. Due Diligence I.Don’t disclose
anything you’re not asked •The psychology on acquirer side quickly shifts to “we’re scared we are going to screw up” •You’ll be shocked by what they freak out about •You’ll be shocked by what they don’t ask •Roll with it II.Lean on your lawyers •Now is the time to really engage them •Make sure they are great III. Stay organized •Google docs checklist •Shared Dropbox folder •Advanced prep04: Close 53

2. Forward motion I.You and
your team must keep moving your company forward •Make sure only a few of you are distracted by the acquisition process •Easier said than done •Now is not the time to drop any balls II.Create a sense of urgency •Continuously remind acquirer why it’s important for them to close by X milestone •“Rabbits out of hats” - Deploy new features and announce new news that will be a pleasant surprise to the acquirer •Disclose any and all overtures from new interested parties III.Temporarily embrace your inner sociopath •If they stop liking you as a person, the deal dies •Restrict their contact with anyone on your team who can’t put on a happy face04: Close 54

3. Deﬁnitive Agreement i. Reps
& Warranties ii. Indemniﬁcation iii. Employment Agreements •If singing up for indentured servitude, ensure you and the team cannot be terminated without cause, and that “cause” is tightly deﬁned04: Close 55